'Name and shame' threat from government prompts FTSE giants to consider new supplier payment rules

Aggreko, Sainsbury’s and Morrisons are looking at adopting new rules on prompt
payments for suppliers after Michael Fallon, the Business and Enterprise
Minister, threatened to “name and shame” companies that refuse to comply.

Sainsbury's said it already abides "by the spirit" of the Prompt Payment Code and will respond in the "coming weeks".Photo: PA

By Nathalie Thomas and James Hurley

6:36PM GMT 06 Jan 2013

Mr Fallon has written to the chief executives of all FTSE 350 companies asking them to sign up to a Prompt Payment Code (PPC) after small and medium-sized businesses complained they sometimes have to wait up to 180 days to receive payment from large companies in return for goods and services.

Mr Fallon said he was “going to war” with corporates over the issue and warned they had one more month to sign up to the PPC before they were publicly named and shamed.

Pressure is now on some of the country’s biggest listed companies to join the code. Other businesses which have yet to do so include Admiral, Amec, Aviva, Compass, GKN, Hammerson, and Rio Tinto.

Sainsbury’s faced a storm of negative publicity last year when it extended the time it takes to pay suppliers of non-food items to 75 days. Some suppliers had previously been on 30 days.

The supermarket said: “We already abide by the spirit of the code and will be responding in the coming weeks.”

Aggreko, the temporary energy supplier which powered the London 2012 Olympics, said it is considering signing the PPC.

“Aggreko has an exemplary track record of paying suppliers on time,” a spokesman said. “In the UK, which represents about 5pc of our revenues, we typically pay suppliers in 40-60 days, which probably makes us one of the fastest payers in the country.”

A spokesman for Morrisons confirmed the Bradford-based supermarket chain is also assessing the code, adding that it already pays suppliers within a “mutually agreed” timeframe.

The Forum of Private Business calls late and slow payment the “modern day scourge” of small companies and says it is becoming more frequent.

Mr Fallon said many large companies are sitting on large cash piles and it is “simply not fair” if they don’t pay their suppliers on time.